Revenge of the Teens: Abercrombie, American Eagle, Aeropostale Jump

By Avi Salzman

Teen retailers are having their best day in months after Abercrombie & Fitch (ANF) posted better than expected third quarter earnings and raised its full-year guidance above analysts’ expectations. Abercrombie itself is up 28% on a phenomenal surge in volume — nearly 22 million shares have traded hands today, versus volume of 2.1 million on an average day. You can bet your boxer briefs that a short squeeze is in effect, as about 15% of the float was short as of October 31.

Analyst Amy Noblin of William Blair thinks that the company has made some important fundamental gains.

“We are upgrading Abercrombie & Fitch [to Outperform] on evidence of top-line stabilization and inventory and expense discipline, in addition to strategies to improve domestic productivity, close underperforming stores, slow international expansion, and increase discipline around capital allocation. We believe revised guidance of $2.85-$3.00, up from $2.50-$2.75, is achievable and potentially conservative.”

Abercrombie is still down 13% in the past six months as its sales have been falling.

Aeropostale (ARO) is up 5% and American Eagle (AEO) is trading 1% higher after opening the day up 3%.

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